August 2, 2010

Every few years someone tries to slip an income-tax proposal into Washington State. We the voters have consistently told them that we don't want one. This particular proposal is worse than most, although cleverly designed to try to get it to pass:

It gives a $4800 tax break to self-employed professionals making $200,000 a year while not lowering taxes significantly for most working people.

It claims to reduce the "state portion of property tax" by 20%. Since most of the property tax is local, that translates into a reduction of only 4.2%!

It unfairly targets people with income that varies widely from year to year. An author who works for 10 years on a book and then makes more than $200,000 would get socked with the tax even though he only made 10% of that per year.

Likewise, if you retire and sell your home or liquidate your life savings from the stock market, you will have to pay 5-9% of any profit over $200,000.

It allows no deductions for home mortgage interest, medical expenses, or charitable contributions.

Worst of all, the legislature is free to change the rules two years after this would pass. They could add another bracket or extend the tax all the way down to your first dollar earned.

Washington is currently in the top ten states both for per-capita income and median income. We have a business tax based on the revenue of the business -- we don't subsidize unprofitable companies like many states. Time and time again our cities are listed as among the most desirable places to live -- and no state income tax is part of the reason.

Some people say that Washington's tax system is unfair and regressive. But the lion's share of taxes come from Federal Income Tax, and of course most of that money comes back to the state (one elected official I talked to estimated 75%). Make no mistake, the purpose of a state income tax is to make it easier for government to make itself bigger.